Will Karnataka oppose SBM-SBI merger?

Bengaluru: The Karnataka government may follow in the footsteps of Kerala and oppose the merger of the State Bank of Mysuru (SBM), the dream child of Sir M. Visvesvaraya, with other state bank entities wherein it would lose its identity.

The Kerala government has decided to challenge the merger of State Bank of Travancore (SBT), an associate bank, with the parent State Bank of India. Three days ago, the Kerala Assembly passed a resolution opposing the merger on the ground that SBT was interwined with the state’s economy and should not be merged with SBI.

The SBM may not have so deep an attachment with Kannadigas as the SBT does with Keralites. But, it is still an iconic institution established by Sir Visweswaraya under the patronage of Maharaja Krishna Raja Wadiyar IV. The institution was set up in 1913 and was known as Bank of Mysore Limited.

Banking and financial expert,Vivek Mallya feels that the government should fight the case to retain SBM’s identity at least for the sake of Visweswaraya. "Once merged the priority of the bank would not be Karnataka centric, be it opening of new branches or lending educational and other loans. So, people of Karnataka will lose an edge in getting facilities once it is merged with SBI," he said.

The state government which has taken note of the Kerala Assembly resolution, is yet to take a call on this matter. "I have not discussed the issue with the CM (who is also the finance minister). Sometime  next week, I will take it up with Mr Siddaramaiah," principal secretary, finance, I.S.N. Prasad said. He was of the  view that it would be difficult for the state to fight this case as the state government is not a share holder of SBM.

Asked about the status of state treasuries which are attached to SBM and whether they might lose banking facilities in case of the merger, Mr Prasad clarified, "The SBM has the treasury facility, so has the SBI. So, the merger will not make any difference."

Ironically, Karnataka has failed to keep several institutions set up by Visvevaraya running. In the past, the state wound up NGEF which was set up by the engineering genius.  Similarly, Bhadravati-based Visweswaraya Iron and Steel plant which was set up by Visweswaraya, had to be handed over to Steel Authority of India (SAIL) due to bad management by the state.

Former advocate general Uday Holla said that it would be difficult to fight the case as the Banking Regulation Act and RBI rules are crystal clear on the merger. "Leaders can make claims for political reasons. But they have to stand the scrutiny of law. In this case, I doubt if there is any scope for the state government to fight the merger," he said.